Drawing the dealing range: which swings actually count

[Shadow Trader]

Premium and discount filters depend on the range you choose, and choosing it carelessly produces useless results. A dealing range is the area between a significant swing high and swing low that defines where price is currently operating. I select it with a few rules. The swings must be external, meaning they are part of the larger structure, not minor wiggles. The low must have led to a break of structure, and the high must be the point from which price retraced. And the range should be sized sensibly relative to my trading timeframe; a range that is too tiny gives noisy signals, while one that is too large makes everything look like discount. When structure changes and a new swing forms, I redraw the range. I do not stretch an old range to fit current price. If I find myself adjusting the range to justify a trade, I stop, because that signals a bias driven by hope rather than structure. Keep a screenshot of the range at the time of entry so you can review honestly later.

[FXS HongKong Scalper]

External swings that led to a break of structure is a good definition. It helps avoid redrawing ranges to suit a trade. I also find it useful to keep the range unchanged until a new break of structure, even if price makes small new highs or lows inside it. That keeps premium and discount stable through the session.